Arthur J. Gallagher & Co.'s Strategic Acquisition of Woodruff Sawyer for $1.2 Billion

Arthur J. Gallagher & Co., a prominent global insurance brokerage firm, has successfully finalized a significant acquisition, purchasing San Francisco-based insurance broker Woodruff Sawyer for a substantial $1.2 billion. Announced in March, this acquisition comes after a competitive selection process where Gallagher surpassed other contenders, including industry giants WTW and Brown & Brown. The decision is part of Gallagher's strategic vision to enhance its property and casualty operations while strengthening its footprint in sectors such as management liability, construction, and real estate. Under this new arrangement, Woodruff Sawyer will be integrated into Gallagher’s US retail property and casualty brokerage division, with its CEO, Andy Barrengos, reporting directly to Peter Doyle. This strategic move promises to expand Gallagher's comprehensive service offerings and reinforce its presence in key markets.

Woodruff Sawyer, esteemed for its extensive commercial property and casualty insurance services, employee benefits, and risk management solutions, focuses on medium to large-scale market clients. With operations extending across 14 offices in the United States and one in the United Kingdom, the firm brings a robust workforce of over 600 employees. The acquisition is set to align Gallagher's objectives with Woodruff Sawyer's existing capabilities, enhancing offerings particularly in specialized areas like directors and officers liability and niche risk advisory services. Such additions are anticipated to significantly complement Gallagher's current portfolio, fortifying its market stance and diversifying its service provisions.

Financially, Woodruff Sawyer projected a pro forma revenue of approximately $268 million for the year ending December 31, 2024, with earnings before interest, taxes, depreciation, amortization, and coronavirus (EBITDAC), including expected synergies, approximating $88 million. The transaction, valuing Woodruff Sawyer at remarkable multiples of around 4.5 times revenue and 13.6 times EBITDAC, aligns with recent industry benchmarks in the brokerage sector. Gallagher has allotted $150 million over three years to cover integration and retention costs associated with the merger, emphasizing its commitment to maintaining the current workforce and leadership at Woodruff Sawyer, thereby ensuring a smooth transition and sustained operational efficiency.

In the broader context, this acquisition is a strategic continuation of Gallagher’s expansionist pursuits, following its monumental $13.5 billion acquisition of AssuredPartners in late 2024. By incorporating Woodruff Sawyer, Gallagher not only diversifies its service capabilities but also extends its reach, particularly on the US West Coast, thus broadening its client base and industry coverage. Founded in 1918, Woodruff Sawyer has a rich history as an independent entity in the insurance brokerage landscape. Its integration into Gallagher is poised to leverage this legacy, providing a broader spectrum of risk management solutions tailored to meet evolving market demands. Through this calculated acquisition, Gallagher further positions itself as a formidable force in the insurance brokerage sector, projecting an image of growth, stability, and proactive market engagement.